Does anyone know where I can find information about how much different charities spend on administration. I heard that the McGrath foundation is a heavy admin spender. I'd like to donate to Fred Hollows but can't see (sorry about that) any info re % $ that will end up in admin.
Some may say that this topic does not belong on Oz B site, but there are probably plenty of members who donate. In keeping with the theme of this site, I just want to get best value for my dollar i.e. most money goes to the cause rather than the running costs of the charity.
Which Charity?
ramshead on 23/02/2015 - 14:56
Comments
OT, but I'm VERY upset about McGrath sitting next to a dead elephant with a gun in his hands that he admits he shot. That is despicable.
http://www.smh.com.au/sport/cricket/brett-lee-implicated-in-…
Are you concerned that Glenn McGrath shot the elephant, or that anyone did?
And what has that got to do with the Foundation?, SO in your world, the fact that Glen went hunting in 2008 means that all of the good work the foundation has done is now undone……..
Here is a guide from Sydney Morning Herald from December 2013.
It covers costs of fund raising(http://www.smh.com.au/national/charities-fundraising-costs-s…)
Definitely a topic worthy of ozbargain!
That one above looks at fundraising $ Vs collection. There were good sites that look at total admin, too. But I can't find them in my bookmarks. It's definitely worth looking into where you are giving.
I think you'd be hard pressed to find anyone complaining about this topic. I've found the OzBargain community to be a very generous bunch.
For starters Scotty's annual donations and system for working out where they go are admirable - maybe having a look at some of the old threads and discussions on that would give you some of the information you are after as well as some ideas.
Ramshead, I'm a subscription donor to FredH. I check admin cost data on all my charities prior to donating, usually via annual reports.
Anything up to 30% for total admin (fundraising included) is reasonable, depending on the type of services and their place of operation. Obviously overseas assistance is more expensive in many cases, and logistics (management) are important to ensure that the aid is targeted AND gets to the place/persons in need. This is an important thing to remember: if charities are NOT spending on logistics then there is a fair chance that your dollars are not getting to the target.
I acknowledge that fundraising is one of the major problems for charities but I refuse to support those who pay 25% and more to professional fundraising businesses.
Edit: try the Gillard established ACNC before Abbott closes it down: http://www.acnc.gov.au/ACNC/FindCharity/ACNC/OnlineProcessor…
https://www.msf.org.au/logistician/?appID=65&URN=275091&utm_…
First on the ground and often the last to leave, in most cases nothing can start until our logisticians have done their job.
Médecins Sans Frontières logisticians work tirelessly behind the scenes to support our medical teams.
They plan and oversee the construction of emergency treatment centres, organise the purchase and transport of medical supplies, and manage the smooth running of the cold chain.
They also supervise the maintenance of vehicles and communication systems to ensure that our programs run smoothly and our medical staff can focus on treating patients.
I never fail to be impressed by what they achieve in often very limited or trying circumstances. But I know that it’s only thanks to the support of Field Partners like you that we have access at all times to the necessary resources and equipment to deliver medical assistance to patients.
Finding solutions in challenging settings
Damien Moloney is an experienced logistician who has completed 12 placements for Médecins Sans Frontières. He summed up his role perfectly when I spoke to him recently.
“My goal is to make sure that the medical team can be patient-focused. If just one child walks in very ill, everyone who works for Médecins Sans Frontières has to focus on that child, and do everything possible to ensure they walk out of the hospital.
"Logisticians are there to make sure doctors and nurses can do their job – we’re all part of the same team.”
Because our work takes place in some of the most difficult settings – war zones, refugee camps, countries affected by natural disasters – a logistician’s role requires an enormous amount of patience, as well as highly developed problem-solving skills.
It’s this kind of ingenuity and expertise that your generosity supports.
Best regards,
Paul McPhun
Executive Director
Médecins Sans Frontières Australia
Thanks for that chunk of copy and paste. But I do agree that MSF does a very good job and from the annual report spent about 17% on fundraising.
Possumbly's post also points out that "admin" is often the grease which helps the charity operate. They're not all sitting in the office all day.
If people understand the full spectrum of "admin" costs they might just make better-informed decisions regarding donations. There's far too much of the "but they spend 1 in every 4 of your donor dollars on admin" guff around.
In a similar vein I also won't donate to charities which pay their executives obscene salaries but that's usually more difficult to determine in this country in particular. Much more info and discussion of these topiucs in the UK and USA in my experience.
It is unfortunate that the "1 in 4" argument deters some people from donating as there very well may be a good reason for that to be the case.
Unfortunately in my job I actually get to see what goes into that 25% - individual line items and all.
Without breaking confidentiality I can't list examples but I can say that based on what I see the waste is extraordinary.
The cause is usually worthwhile and beneficial to mankind, unfortunately when you get mankind to run those charities and NFPs, personal agendas tend to take precedence over the cause.
@iampoor: perpetuating the "myth" or do you expect perfection from charities? Personally I expect the charities I support to run their services efficiently and openly, to make good decisions regarding their finances and to ensure minimal waste over all. I DON'T expect they will get every decision, purchase, expenditure, or service exactly correct. I'm confident they do very well against all parameters a reasonable person would judge them by, despite your comments.
Your comments could and do apply to far too many charities but it's the highly generalised tar them all with the same brush attitude which annoys me no end. Undoubtedly some charities are "worse" (far worse in some cases) than others. It's precisely what efficient and focused charities are up against. What percentage are you claiming is outside reasonable operation costs? How do you know precisely what was involved and whether the costs were reasonable? Do you expect everyone working for charity to give the "clothes off their backs"?
Your last statement is waffle. It may apply to many charities but it equally does NOT apply to many others. Then again I understand that there is no such thing as a perfect human system and I don't expect that the charities I support are perfect either. People who use it as an excuse not to give a little of their wealth should have a long hard look in the mirror.
@Possumbly: I do not expect perfection from charities nor do I expect that these charities waste nothing at all.
Granted, my views are a generalization of the sector but having both audited and worked for charities, I can tell you that what you see on a financial report will not give you a true understanding of how things are manipulated behind the scenes.
Perhaps you should ask the charities you support the following questions:
- What ratio of the admin costs go towards non front-line staff salaries?
- How much of the admin cost is actually spent on non-core activities such as internal entertainment?
- Are the non business-related perks provided to executives (car, car parking, hotels, bonuses etc.) disclosed as admin or operating expenses?
- What is their financial governance policy and how is compliance to that policy monitored?
- What measures are in place to ensure that the Board of Directors are presented with transparent and accurate financial information upon which executive remuneration is awarded?
I can provide you with more questions if you require, but I have found that the charities which I have questioned in a similar vein are no longer so keen to get my money.
Unless a worthy charity comes along which I feel does not unnecessarily waste money, I will continue to volunteer my time in the front lines actually providing services which are useful to the people who are in need.
@iampoor: I don't need your advice or questions Iampoor, I know what auditors do (they certainly do NOT know the details or inner workings of most businesses as you appear to be suggesting), and I know a good deal about charity governance - and lack of it in some cases.
What I do need is your answer. What % do these supposed "rorts" constitute, in roughly how many charities, and on what basis do YOU judge they are beyond reasonable expectations? Your cynicism is well-placed in particular cases but there are MANY well-governed and worthwhile charities available so it's NO EXCUSE for not giving (money in particular) if you can afford it.
@Possumbly: Over the years I have audited about 30 NFPs and charities, worked in 2 within the health sector.
I am the person expected to do the shifting and balancing of the admin and operating figures and over time have developed contacts with other FCs and CFOs within the NFP and charities space.
My cynicism is based on the above and the fact that when I am approached for money the organisations are either unwilling or unable to answer my questions and thus gain access to my funds.
It is my money, I have worked hard for it and I can definitely afford to donate. I choose to do my own due diligence before donating and if the organisation wanting my money is unable to provide it, I am not providing my money.
You seem to know many well-governed and worthwhile charities, perhaps you would like to share a few of them with me?
@iampoor:I understand the need for diligence as both a donor and a recipient of public funds and as I've already stated I commend research to anyone considering donating. What I don't accept is the inaccurate, generalised value judgement you've made. Two prompts to quantify this apparent rorting yet no answer.
Try MSF, FredHollows, WorldVision, Amnesty International and the Cerebral Palsy Alliance for starters. They're imperfect so may not fit your dream of charity nirvana but they are credible, well-governed organisations which do their very best to use their donations and resources well. There are plenty more IF you're truly interested and come overcome your self-imposed cynicism.
Have a think on this. Nothing would ever be achieved for those who benefit from the work, products and services provided by charities if we don't donate because we have unrealistic expectations. Oh and let me know when you find that perfect organisation and those perfect people delivering the perfect service.
@Possumbly: my judgement is from my personal experience auditing the financials of charities and working for charities producing them.
Naming and shaming is career suicide since the information isn't widely available.
Have a look into WorldVision and their links to Citylife Church in Victoria :)
A lot of the good work done by charities are carried out by volunteers who don't get paid. Give it a try one day instead of donating money, cooking and serving food to the less fortunate brings a perspective that no amount of money can buy.
@iampoor: You're avoiding the question and we both know why so perhaps we should leave it at that. I'm not asking you to name and shame, I could do the same easily enough.
I know nothing about Citilife Church but looking at the website I don't see anything sinister whatsoever, unless you believe social justice is something to be shunned.
There are different ways of supporting charitable organisations and I don't for one minute knock people who give their time, expertise and labour in lieu of dollars. Plenty do, on a regular basis. Oddly enough many give both time and money in varioius proportions. In the end though dollars count so discouraging people from giving - for reasons which don't stand fair scrutiny - is very poor form.
Thanks to all posters. You have provided some insightful info through those links. Cheers.
Yep, if the figurehead is shooting elephants etc, I'm putting my money elsewhere - there are so many cause that I could choose.
If that doesn't suit you guys, so be it.
I have a friend that works in the "industry", the ones with low admin costs have only re-allocated/renamed the admin cost as something else.
Admin costs for AU charities is quite high due to government compliance regulations and AU wages. I've seen some of the stuff my friend does for compliance to the regulations and it's crazy… but they are kept accountable, especially regarding money going to aid other countries.
Unsubstantial waffle. What are the "crazy" compliance requirements and how much do they add to costs? Are they worthwhile? Do you have any idea of the reasons why money leaving the country would need to be verified and audited? The admin costs for Aust charities I support is NOT high by any measure so they must be performing miracles.
DFAT has audit requirements and reporting that must be met on a monthly basis. The admin time for this alone is quite high (I was helping my friend last weekend to compile information because she didn't have enough time during to the working week).
Other than that, I can't say because it is not my industry, but charities that also have a portion of funding from the government have high compliance costs. I can't speak to charities that do not receive government funding.
Thus the high admin costs for certain charities (with govt funding) vs others (without) maybe a reason. I hope this qualifies my statement enough for you. :-)
I just want to get best value for my dollar i.e. most money goes to the cause rather than the running costs of the charity.
GiveWell.org conducts extensive research to find the worlds most cost effective charities. These are their current top charities and their recommended allocations:
- 67%: Against Malaria Foundation (AMF): Preventing deaths from malaria in sub-Saharan Africa
- 13%: GiveDirectly: Distributing cash to very poor individuals in Kenya and Uganda
- 13%: Schistosomiasis Control Initiative (SCI): Treating people for parasite infections in sub-Saharan Africa
- 7%: Deworm the World Initiative (DtWI): Treating children for parasite infections in developing countries
The links above are to GiveWell's in-depth evaluations. You can make a single donation here and GiveWell will distribute it to its four top charities in the recommended proportions.
There are two other organisations that similarly work to determine the world's most effective charities.
- The Life You Can Save recommends 10 top charities, including AMF, GiveDirectly and SCI
- Giving What We Can recommends 4 top charities, which include AMF, SCI and DtWI
There is plenty more I could say, happy to answer any questions you might have about that :-)
Firstly Op, good thread & good on you for wanting to research before handing over your money. If only more people did this, then many of the shysters in the industry would disappear.
I'm amused that people think 25%+ overhead is acceptable? The reason the admin costs have risen is that charities now tend to be run as a business. They impose quite a bit of administrative overhead (some imposed by the Govt). They focus a lot of attention & effort on the actual fundraising side of things, rather then the charity work. The first thing I look at is fundraising costs as a percentage, as some charities spend a good chunk of your money on this. Also paying CEO's $250k+, flashy advertising campaigns & shops in expensive locations are red flags for me.
I agree with the others, donating your time is much more effective (and rewarding) then monetary donations. It also quite easy to tell if that charity is worthy of your hard earnt dollars.
You appear to be an intelligent person so I'm confident your amusement would turn to understanding IF you bothered to do research about the numerous inclusions involved in "overheads". I'm not sure why anyone would be amused either way myself - it's either a travesty of "waste" or a reasonable expenditure, but that's by the by.
Hopefully you understand that organising and delivering aid has myriad costs - housing your organisaton, establishing and running donation, communication, & financial systems, paying people for their time and expertise, lobbying, and YES SURPRISE, SURPRISE, actually spending money where necessary (where freebies aren't available) to raise funds and awareness of the charity and its work. The question is NOT whether any of these is essential or legitimate - they clearly are - it's about what is reasonable and, depending on the complexity of the charity's work anything up to about 30% IS reasonable despite your uninformed comment. These charities MUST be run as businesses because it's the most efficient way to use available funds, measure and show your results, and be transparent about your finances.
I've already flagged the CEO salary issue elsewhere but seriously if you think that the head of a major (note the word) charitable organisation isn't worth 250K then you're living in la la land. I was talking about the $4M+ sums paid to some UK and USA chiefs in particular. Even there a million dollar salary could be justified in some cases of global charities (we never know how much they put back into the charity so it's always a vexed question). Good CEOs bring in good people, they are practical, personable and good at complex negotiation, they are influential in getting business donations, and they help to inspire the public to donate. Well worth 250K++ when you know what they do and the time they give. Boards are often constituted of volunteer professionals in this country but there still costs involved there as well - unless you think they meet in parks or on the train home.
I see the "it's rewarding" comment rear its head again so it's time to make an observation. A small part of giving - time or money - is the "reward" you get from doing it. A great thing, but its not about that at all. I recall someone saying many years ago about donating - if it's not "hurting" you then it's not a sacrifice. If giving your time once or twice a year is a substitute for giving dollars you can easily afford then it's still a valuable contribution, albeit a slightly diminished one.
I've already made my point elsewhere about your claim that giving your time and energy is "much more effective" but I'll elaborate a little. That really depends on the charity. If it's something as "simple" as food aid then you MIGHT be right. They need bodies to pick up and deliver goods and prepare and serve meals. The vast majority of charities though need MONEY and their biggest 'hands-on' requests are for people to raise money - by phone, by collection, by organising, participating in, or assisting at fundraising events. I'm bemused though that you seem to think that hands-on assistance would give you any insight into whether charities are well run and deliver what they claim. How exactly do you do that?
One final comment. There has been a proliferation of small charities in recent times so much so that on the surface it appears that charity is now an industry in itself. Don't let that put you off. The vast majority of charities, big and small, are "worthy of your hard earnt dollars" despite their many shortcomings, some are simply better at managing and delivering than others.
Your comments all clearly demonstrate that you understand how charities need a reasonable amount of money to go towards the raising of funds.
If the charities are using effective methods of fundraising, such as good face to face companies that raise enough money to not only cover their costs but also profit a large amount for the charity, then it really isn't a problem. I suppose that just comes back to looking at cost effectiveness rather than the overhead.
But I totally agree with you and I'm glad you're sharing the word!
Choice gives a good summary of administration costs which is worth a read before you get too fixated on finding a charity with lower overhead costs: http://www.choice.com.au/blog/2011/december/make-your-charit…
I just want to get best value for my dollar i.e. most money goes to the cause rather than the running costs of the charity
Those are actually two different things, i.e the "best value for your dollar" is what's important, not the proportion of administrative vs program costs.
Here is an infographic from Charity Science that should help to explain why.
To put it simply, we should rather compare charities based on cost effectiveness, not overhead. Consider the following two charities. Charity A is able to save a child's life for every $1,000 it receives, while Charity B saves a child's life for every $2,000 it receives. If you were to choose between these charities, Charity A is always going to be the better choice, regardless of what proportion of income is spent on overhead by either charity.
I think the reason the overhead "myth" has persisted is that it is somewhat easier to estimate overhead than to estimate cost effectiveness. But now, thankfully, that is where organisations like GiveWell come in. Each year they publish a list of top charities that are the most cost effective, evidence-backed, thoroughly vetted, and underfunded.
Good points (and graphics).
I read the Givewell summary of Fred Hollows. Hardly evidence-backed, thoroughly vetted (or perhaps thoroughly understood would be more accurate), or comprehensive imo. Also read FH's response which pretty much summed up the "review". Output metrics are not even valid indicators of effectiveness or value in many circumstances. It may be for meal providers but for "life changing" work lifting a dozen people out of the poverty trap or providing educational support can have large, ongoing effects over the long term. Hence you need to use your own judgement to some extent about a charity's work and its effectiveness. The old handouts V handups cliche has considerable merit in particular cases.
All the large US charity watch sites perform a very useful function and appear to be decent guides - at least those I've perused. The good part is that they offer plenty of information for anyone concerned about their chosen charities. Pity we don't have something similar.
I read the Givewell summary of Fred Hollows.
GiveWell is notoriously stringent and, yes, after their review of Fred Hollows Foundation (FHF) they decided not to recommend them as one of their top 4 charities. That does not mean that FHF is a particularly bad charity when evaluated objectively. In fact, they are well above average - The Life You Can Save recommends FHF as one of their top 16 charities (one of only 2 that is tax deductible in Australia - the other is Oxfam). Keep in mind that that FHF review was written in 2010, and is very shallow compared to the in-depth reviews of their top charities.
[Some interventions] can have large, ongoing effects over the long term.
Absolutely, and evaluating the extent and cost effectiveness of those effects requires large scale randomized controlled trials (RCTs). That is exactly the kind of work that GiveWell and related organizations advocate for. The fact that most charities do not have such evidence backing them up is one of the main reasons why GiveWell only recommends 4 top charities out of the thousands and thousands around the world.
I agree that the business of designing output metrics and evaluating the cost effectiveness of different charities is difficult. But I don't think that's reason not to try, and I'm very glad that GiveWell is there to help with that :-)
Page 35 of the 2013 Annual Report (Seems to be the latest on website)
http://www.hollows.org.au/sites/default/files/pdfs/annualrep…
Over $14m on fundraising and admin or about 25% of the annual revenue.
This is the reason I volunteer(donate) my time and not my money…
Most other charities will list this in their annual report or financials.